Foundry Industry's First Half Performance Decline... Samsung's Bold Move in Leading-Edge Processes

TSMC and Other Foundry Companies See Revenue Decline in First Half
Samsung Electronics Foundry Division Also Decreases in First Half
Samsung Strengthens Competitiveness in Sub-5nm Advanced Processes

Due to sluggish conditions in the semiconductor industry, sales in the foundry (semiconductor contract manufacturing) sector declined in the first half of the year. It is also assessed that Samsung Electronics' foundry division's performance has decreased. Samsung Electronics has launched a multifaceted chase against TSMC by enhancing technology in advanced processes below 5 nanometers (nm; 1 nm = one billionth of a meter) and increasing capacity (production capability) in preparation for the upcoming boom.

On the 12th, Taiwanese foundry companies pre-released their June sales ahead of their Q2 earnings announcements. The industry leader TSMC's sales last month were 156.4 billion Taiwan dollars, down 11.1% from the same period last year. The 4th-ranked UMC recorded 19.1 billion Taiwan dollars, a 23.24% decrease. The first half (January to June) sales were 989.5 billion Taiwan dollars for TSMC and 110.5 billion Taiwan dollars for UMC, down 3.49% and 18.43% respectively from the first half of the previous year.

Samsung Electronics Pyeongtaek Campus line view /
[Photo by Samsung Electronics]

The situation is similar for the US-based GlobalFoundries, ranked 3rd in the industry. GlobalFoundries recorded sales of 1.841 billion dollars in Q1, down 5.1% from the same period last year. The forecasted sales for the next quarter, announced during the Q1 report, ranged from 1.81 billion to 1.85 billion dollars. Even if Q2 sales hit the maximum forecast, the first half sales for this year (3.691 billion dollars) will be 7.56% lower than the first half of last year (3.993 billion dollars). GlobalFoundries will announce its Q2 sales next month.

Samsung Electronics, ranked 2nd, does not disclose foundry division sales separately. However, industry insiders estimate that Samsung Electronics also inevitably experienced a decline in foundry performance in the first half. Samsung Electronics recorded sales in the non-memory sector (System LSI division + foundry division) of around 4 trillion won in Q1. Sales in Q2 are also expected to be in the 4 trillion won range. Compared to the first half of last year (sales between 13 trillion and 14 trillion won), sales have nearly halved.

In this situation, Samsung Electronics is actively pursuing business centered on advanced processes. It is chasing TSMC by enhancing technology in processes below 5 nm. It will engage in full-scale competition with TSMC in the 2 nm process, scheduled for mass production next year. The next-generation gate-all-around (GAA) transistor technology, introduced earlier than TSMC, is the source of its competitiveness. Analysts in the securities industry have noted that Samsung Electronics recently raised the yield (ratio of good products among manufactured items) of its 4 nm process from the 50% range to 75%.

The increasing number of fabless (semiconductor design) customers seeking to reduce dependence on TSMC is also positive. Park Sang-wook, a researcher at Hi Investment & Securities, said, "As TSMC's average selling price (ASP) continues to rise, fabless companies' demand for dual sourcing (foundry diversification) is increasing." Samsung Electronics is expanding capacity and increasing semiconductor intellectual property (IP) and various services provided to customers in this process. It is working hard to supplement business areas that were pointed out as lacking compared to TSMC.

Kyung Kye-hyun, President of Samsung Electronics' Device Solutions (DS) Division, said in this regard, "From 2 nm, the industry leader (TSMC) will also adopt GAA," adding, "At that time, our technology level will be the same as the industry leader." He also expressed ambition to catch up with TSMC within five years. In a lecture held last month at Yonsei University, he revealed that Samsung Electronics is focusing on securing IP, saying, "We have recently made many big deals with global partners." Samsung Electronics plans to secure various IPs required by customers for the 2 nm process by the first half of next year.

This content was produced with the assistance of AI translation services.